Elena Carletti, Tommaso Oliviero, Marco Pagano, Loriana Pelizzon, Marti Subrahmanyam, 19 June 2020

The COVID-19 induced crisis has caused severe distress for the economy. This column estimates the profit and equity shortfalls triggered by the COVID-19 shock for a representative sample of Italian companies, including large, medium and small companies. A three-month lockdown is found lead to an aggregate annual drop in profits of €170 billion, with an implied equity erosion of €117 billion. Some 17% of all firms, employing over 800,000 workers, are estimated to face severe distress. Small and medium enterprises are affected disproportionately, with 17.2% of affected compared with 6.4% of large firms.

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